Deck 17: Introduction to Sales and Lease Contracts

Question 1

A lease is an agreement to transfer the right to possess and use goods for a period of time in exchange for payment.

Answer 1

True

Question 2

Under the UCC, parties to sales and lease contracts are free to establish whatever terms they wish.

Answer 2

True

Question 3

To be characterized as a "good" under the UCC, an item of property must be movable and tangible.

Answer 3

True

Question 4

Growing crops are not considered goods.

Question 5

The majority of courts treat contracts for services as being included under the UCC.

Question 6

In certain situations, the UCC imposes special rules on merchants.

Question 7

The UCC states that a contract cannot exist unless the moment the offer is accepted can be determined.

Question 8

The UCC provides numerous open-term provisions that can be used to fill in the gaps in a contract.

Question 9

Because stocks and bonds have certificates, they fall within the scope of UCC Article 2.

Question 10

The Uniform Commercial Code is the federal law governing contracts for the sale and lease of goods.

Question 11

The UCC requires parties to form sales and lease contracts with the same degree of formality used in forming other types of contracts.

Question 12

Tangible property has conceptual existence and not a physical existence.

Question 13

A merchant is a person who deals in goods of the kind involved in the sales transaction.

Question 14

A lessor is one who acquires the right to the possession and use of goods under a lease.

Question 15

To the extent that it has not been modified by the UCC, the common law applies to sales contracts.

Question 16

Minerals fall within the scope of Article 2 if they are to be severed from the land by the seller.

Question 17

UCC Article 2A covers leases of goods and is similar in many respects to Article 2.

Question 18

Under the UCC, in the case of a dispute, all that is necessary to prove the existence of a contract is an indication that there is a contract.

Question 19

Under the UCC, merchant's choice is a test to determine whether a contract is primarily for the sale of goods or services.

Question 20

Under the UCC, in the case of a dispute, any missing terms cannot be proved by external evidence.

Question 21

The UCC permits acceptance of an offer to buy goods by a promise to ship conforming goods to the buyer.

Question 22

Under the UCC, an agreement modifying a contract needs no consideration to be binding.

Question 23

A contract for the sale of goods priced at $200 or more needs to be in writing to be enforceable.

Question 24

Under the UCC, an oral contract for a sale of goods is enforceable once goods have been received and accepted.

Question 25

In interpreting a commercial agreement, a court will assume that the usage of trade was taken into account when the agreement was phrased.

Question 26

The UCC requires that the mirror image rule be followed for all acceptances.

Question 27

Acceptance of an offer to lease goods may generally be made in any reasonable manner and by any reasonable means.

Question 28

Under the UCC, an oral contract subject to the Statute of Frauds will be enforceable if there is evidence of partial performance.

Question 29

A contract for the lease of goods involving total payments of $500 or more needs to be in writing to be enforceable.

Question 30

A firm offer in writing by a merchant is revocable at any time before acceptance.

Question 31

Jo owns a condominium that she leases to Katrina. Jo gives her daughter Lucia $450 on her sixteenth birthday. Jo sells her car to her neighbor Maria for $1,500. UCC Article 2 covers

A) the lease with Katrina.
B) the gift to Lucia.
C) the sale to Maria.
D) all of the choices.

Question 32

Article 2 of the UCC governs

A) all of the choices.
B) leases of goods.
C) contracts for services.
D) contracts for the sale of goods.

Question 33

Under the UCC, contract modifications made in bad faith are still enforceable.

Question 34

The UCC permits acceptance of an offer to buy goods by a prompt shipment of nonconforming goods to the buyer.

Question 35

Lee pays Mobile Electronics $600 for a new phone. Under the UCC, this is

A) a merchant's firm offer.
B) a lease.
C) a sale.
D) a contract for services.

Question 36

Under the UCC, a contract is formed if the offeree makes a definite expression of acceptance.

Question 37

Jacob offers to sell Bill a collection of baseball cards. For their transaction to be a sale under the UCC, Bill

A) must pay for the cards in cash.
B) must pay for the cards with services.
C) may pay for the cards with cash, goods, or services.
D) must pay the fair market value of the cards.

Question 38

Excluded from Article 2 of the UCC is

A) minerals that the seller will sever from the land .
B) corporate stocks and bonds.
C) crops that are growing on the land.
D) a car that comes with a service warranty.

Question 39

Under the UCC, the meaning of any agreement must be interpreted in light of commercial practices.

Question 40

If the quantity term is left open in a contract for a sale of goods, there still is a basis for determining a remedy.

Question 41

Ed sells his car to Fran for $5,000, his bike to Gwen for $600, his game player to Holly for $200, and three shares of stock to Inez for $100. Article 2 of the UCC does not apply to the sale of

A) the car.
B) the bike.
C) the game player.
D) the stock.

Question 42

Brad buys a bulldozer from Construction Equipment Corporation, which he leases to Deep Digs, Inc. In this situation, the lessee is

A) Brad.
B) Construction Equipment Corporation.
C) Deep Digs, Inc.
D) none of the choices.

Question 43

Grains, Inc., agrees to sell to Harvest Bread Company a certain quantity of refined grains each week but many other terms are missing. In the case of a dispute, a court will presume

A) whatever favors Harvest.
B) whatever favors Grains.
C) whatever is reasonable.
D) nothing.

Question 44

Curt enters into a contract with Drivers Lease Company for a three-year lease of a car. This contract is subject to

A) Article 2 of UCC.
B) Article 2A of the UCC.
C) none of the choices.
D) the common law only.

Question 45

In a dispute over a sale involving a skateboard, Greg argues that as to this deal Hobby Shop, where Greg bought the board, is a merchant. A court may determine whether the shop is a merchant by assessing whether

A) it has sold any skateboards within the last two years and if skateboards make up at least 5% of its sales.
B) it holds itself out as having knowledge and skill particular to skateboards.
C) its owner enjoys skateboarding.
D) it subscribes to Boards , a biweekly trade magazine.

Question 46

Dona offers to sell her used sofa, chair, coffee table, end table, and lamp to Erma for $700. Erma responds that she will pay that price if Dona's TV set is included. Neither party is a merchant. Their contract is formed according to

A) the new terms of the acceptance.
B) whatever is reasonable.
C) the terms of the original offer.
D) none of the terms.

Question 47

Manufacturing Corporation orders twelve safety videos from Productions, Inc., which delivers the videos. This is most likely

A) a gift.
B) a lease of goods.
C) a sale of goods.
D) a contract for services.

Question 48

Dian, an agent for Expo Motors, Inc., writes a letter to Flynn on November 1 stating that she will sell him a 2017 Subaru Outback for $25,000 between November 1 and December 31. Dian's letter to Flynn is

A) a merchant's firm offer.
B) an acceptance.
C) a contract for services.
D) none of the choices.

Question 49

Fresh Dairy, Inc., is the offeror and Gelato Ice Cream Company is the offeree under a unilateral sales contract in which Hector's Helado Corporation is also interested. Gelato is not notified of Fresh Dairy's performance within a reason-able time. Gelato

A) may treat the offer as having lapsed.
B) must assume that Fresh Dairy has started to perform.
C) must contact Fresh Dairy.
D) must notify Hector's.

Question 50

In contrast to standards that apply to consumers, the UCC imposes on merchants

A) only the predominant-factor test.
B) special rules.
C) no rules.
D) the same rules.

Question 51

Clean Mouth Clinic offers to buy from Dental Supplies Company a certain quantity of floss and other items for a certain price. Dental can accept the offer by

A) a material alteration of the terms within a reasonable time.
B) a promise to ship or a prompt shipment of the goods.
C) a prompt shipment of the goods only.
D) a promise to ship only.

Question 52

Sara and Tim enter into a contract for a sale of orchids. With respect to the specific contractual provisions set out in the UCC, these parties may

A) agree to different terms only to a reasonable extent.
B) agree to different terms unless they "get caught."
C) agree to whatever terms they wish.
D) not agree to different terms.

Question 53

Auto Body & Paint Company orders custom paint from Best Hues Inc., but Best does not deliver. Auto Body will probably be unable to enforce the agreement if the parties omitted

A) a price term.
B) a delivery date.
C) a quantity term.
D) shipping arrangements.

Question 54

Marine Expeditions, Inc., pays Nate's Boats $4,000 to use an oceangoing vessel for a month. For the purposes of the UCC, this is

A) a merchant's firm offer.
B) a contract for services.
C) a lease.
D) a sale.

Question 55

Containers, Inc., sends its standard order form to Distribution Corporation to evidence a sale of packing materials. Distribution responds with its own standard purchase order form . Additional terms in the purchase order automatically become part of the contract unless

A) the terms materially alter the original contract.
B) the original offer expressly required acceptance of its terms.
C) the offeror objects to the new terms within a reasonable time.
D) any of the choices.

Question 56

Ferris is refinishing his kitchen floor and needs a floor sander to complete the job. Ferris's neighbor Gina suggests that he call Home Repair Rentals, Inc. Home Repair leases Ferris a floor sander. In this transaction, the lessor is

A) Ferris.
B) Gina.
C) Home Repair.
D) none of the parties.

Question 57

Refined Metals Company and Superior Fabrication, Inc., enter into a contract under which Refined agrees to deliver a certain quantity of sheet metal to Superior each month. The contract does not include a price term. In a suit between the parties over the price, a court will

A) determine a reasonable price.
B) impose the lowest market price.
C) impose the highest market price.
D) return the parties to the positions they held before the contract.

Question 58

Talk, Inc., offers to buy from Ultra Corporation 1,000 phones with certain features. Without notifying Talk, Ultra timely ships phones with fewer features. With respect to the offer, this shipment is an acceptance and

A) a breach.
B) an accommodation.
C) complete performance.
D) a counteroffer.

Question 59

Rice Lake Farms offers to sell Sensei Sushi Restaurants, Inc., five hundred bushels of rice. Sensei responds, "We agree to buy five hundred bushels only if the rice is Grade A quality." Without more, their contract is formed according to

A) the new terms of the acceptance.
B) whatever is reasonable.
C) the terms of the original offer.
D) none of the terms.

Question 60

Medico Inc. enters into a contract to sell medical supplies to New Hospital Corporation, which sells some of the items to Physicians Clinic, which later sells them to Oscar, a patient and consumer. Article 2 of the UCC applies to the sales transactions between

A) Medico, New Hospital, Physicians Clinic, and Oscar .
B) Medico and New Hospital only.
C) Medico, New Hospital, and Physicians Clinic only.
D) Physicians Clinic and Oscar only.

Question 61

Fact Pattern 17-1 Farmers Produce, Inc., and Growers Market enter into a contract for the delivery of locally grown fruits and vegetables. The parties use a standard Farmers Produce form that contains some of the terms the parties agree on but not others. Some of the produce spoils before it can be cooked, served, and eaten, or sold. Growers Market refuses to pay for the spoiled goods.
Growers Market sends in an order to Farmers Produce for the delivery of locally grown fruits and vegetables. Because of an early freeze, some of the locally grown fruits are not available. Farmers Produce substitutes some fruits from outside the contract definition of "local" and includes a notice that they are making an accommodation shipment due to the freeze. Farmers Produce

A) accepted the offer and breached the contract by sending nonconforming goods.
B) accepted the offer but did not breach the contract because of the note .
C) did not accept the offer because the acceptance was different.
D) has an opportunity to find the locally grown fruit and send it as soon as possible.

Question 62

Bert's Bagels, Inc., and other bakeries refer to a "baker's dozen" as consisting of a collection of thirteen baked goods. This is an example of

A) the course of dealing.
B) the course of performance.
C) none of the choices.
D) usage of trade.

Question 63

Tune Products, Inc., offers to sell to Unlimited Sales Company one hundred MP3 players at $50 each, subject to certain specific delivery dates. Unlimited replies with a signed purchase order that reads, "Accept your offer for 100 MP3 players at $50 each.  Must be delivered to our warehouse." Tune does not respond or deliver the goods. Unlimited files a suit for breach of contract, to which Tune answers that there is no contract because Unlimited's purchase order contained additional terms and is not signed by Tune. Can Unlimited recover? Explain.

Question 64

Grass Farms LLC offers to sell fifty bales of hay at a certain price to Horse Stable Inc. The owner of the stable responds, "We agree if you agree to make it sixty bales for the price." Grass Farms responds, "I can't do that." If a court finds a contract exists, it is a contract with

A) the new terms of the acceptance.
B) whatever the court decides is reasonable.
C) the terms of the original offer.
D) new terms to be negotiated by the parties.

Question 65

iSharp, Inc., and Jenene, the owner of a Kitchen Time shop, orally agree to a sale of knives and other utensils for $12,000. Jenene gives iSharp a check for $4,000 as a partial payment. This contract is

A) enforceable to the extent of $4,000.
B) fully enforceable because it is for specially selected goods.
C) fully enforceable because it is oral.
D) not enforceable.

Question 66

Clean Machines Company makes washing machines. Over the phone, Clean offers to sell Dealers Appliance Outlet one hundred model EZ2000 washers at a price of $150 per unit. Clean says that it will keep the offer open for ninety days. In that same call, Dealers responds that within two or three weeks it will decide whether to accept. One week later, Clean faxes, and Dealer receives, notice that the offer is withdrawn. Dealer immediately phones Clean to accept the $150-per-unit offer. When Clean refuses to deliver at that price, Dealer files a suit. Clean asserts, first, that there is no contract and, second, that if there is a contract, it is unenforceable. Discuss Clean's assertions.

Question 67

Bean Processors Inc. agrees to ship a certain quantity of coffee beans to Coffee Café LLC. Bean sends to Coffee an e-mail indicating that the parties intended to form a contract.  Against Bean, as a contract, this writing will be sufficient

A) if it is signed by Bean.
B) if it is signed by Coffee.
C) if Coffee responds with an acknowledgement of the deal.
D) under no circumstances.

Question 68

Swift Trucking, Inc., and Trailer Rents Corporation are parties to an oral agreement for a one-year lease of six doublewides with payments totaling more than $40,000. They may satisfy the Statute of Frauds by

A) mutually agreeing not to commit fraud.
B) repeating the terms in a phone call.
C) setting out the terms in a memo.
D) shaking hands on the deal.

Question 69

Fact Pattern 17-1 Farmers Produce, Inc., and Growers Market enter into a contract for the delivery of locally grown fruits and vegetables. The parties use a standard Farmers Produce form that contains some of the terms the parties agree on but not others. Some of the produce spoils before it can be cooked, served, and eaten, or sold. Growers Market refuses to pay for the spoiled goods.
Refer to Fact Pattern 17-1. Farmers Produce responds that it has never waived payment for spoiled goods in the past. Farmers Produce is arguing that the court should take into account

A) the course of dealing.
B) the course of performance.
C) the usage of trade.
D) none of the choices.

Question 70

Ron enters into written agreements with Sophie involving a sale of Timberline Motel, including the land, the building, and the furnishings. The UCC Statute of Frauds governs the sale of

A) all of the choices.
B) the building.
C) the furnishings priced at $500 or more.
D) the land.

Question 71

Jack sells a grand piano to Kyle for $5,000 and a gold ring to Lauren for $999. A writing is required to enforce the sale of

A) the piano only.
B) the piano and the gold ring.
C) neither the piano nor the gold ring.
D) the gold ring only.

Question 72

Fact Pattern 17-1 Farmers Produce, Inc., and Growers Market enter into a contract for the delivery of locally grown fruits and vegetables. The parties use a standard Farmers Produce form that contains some of the terms the parties agree on but not others. Some of the produce spoils before it can be cooked, served, and eaten, or sold. Growers Market refuses to pay for the spoiled goods.
Refer to Fact Pattern 17-1. Growers Market contends that the practice in the trade with respect to payment for spoiled produce justifies its refusal to pay. Growers Market is arguing that the court should take into account

A) the course of dealing.
B) the course of performance .
C) the usage of trade.
D) the usage of performance .